The World Trade Organisation reported that global trade is expected to fall by between 13% and 32% in 2020 as the COVID 19 pandemic disrupted normal economic activity and life all around the world. The report emphasizes that the immediate goal is to bring the pandemic under control. WTO also mentioned that forecasting how the world economy will look like in 2021 or 2022 remains difficult.
“The decline in trade will have painful consequences for households and businesses.”
WTO Director-General Roberto Azevêdo said that this crisis is, first and foremost, a health crisis that has forced governments all over the world to take unprecedented measures to protect people’s lives. He further noted that the inevitable declines in trade and output would have painful consequences for households and businesses, on top of the human suffering caused by the pandemic. The WTO Director-General also advised that policymakers must start planning for the aftermath of the pandemic. He believes that decisions taken now will determine how the future shapes in regards to the recovery and global growth prospects.
This economic crisis can not be compared to the great recession of 2008.
According to the World Trade Organisation report, today’s economic crisis is not comparable to the Great Recession of 2008. In the last recession, governments were able to intervene with monetary and fiscal policy to remedy the economic crisis. However, this time restrictions on labor, transport, and travel are affecting the world economy far differently. Roberto Azevêdo emphasized the importance of the world working together to get through this crisis. He said that if countries work together, we will see a much faster recovery than if each country acts alone.
Economic analysts have been arguing that the world economy may see a deflationary shock as a result of depressed demand among consumers due to mass layoffs. US Federal Reserve has been printing money endlessly and which has led many to believe that hyperinflation is inevitable. So far, over 1.5 million people have been diagnoses with COVID 19, and over 95,000 people have lost their lives.